The Association of British Insurers (ABI) has indicated that up to 200,000 homes at risk of flooding will face difficulties in obtaining buildings insurance next year.
To highlight this, they have mapped neighbourhoods with the highest risk of flooding in England and Wales, ie. the areas where homeowners will struggle the most to obtain insurance. The greatest risks were found to be at Boston and Skegness(in Lincolnshire), as well as the Vale of Clwyd (North Wales) and Nottingham South.
The ABI said that the change will be triggered by an end to the current pact, the ‘Statement of Principles’, between the Government and Insurers which guarantees homes most at risk from flooding are insured at reasonable rates in return for a commitment from the Government to continually improve flood defences.
Should this pact not be renewed, homeowners could face difficulties securing insurance, which will violate the terms of their mortgage contract and could leave many in serious difficulties. It has been estimated (IdealGroupUK) that up to £214bn worth of property could be left uninsured in the worst case scenario.
With this agreement ceasing in June of 2013, stakeholders including the Public Accounts Committee (a group of MPs) are urging the Government to draw up a replacement agreement as a matter of urgency. The commitment to flood defence, however, is a costly one for the Government, with yearly costs of at least £1.1bn at present, predicted to rise between £1.5bn and £3.5bn a year by the 2020s as a result of climate change.
Regardless, a spokesperson for Defra, the relevant Government department, has commented:
“We want flood insurance to remain widely available and are continuing to work with the insurance industry to ensure that this will be the case after the current agreement between government and insurers expires in 2013.
“As part of these discussions, over the next few months we will consider whether there are feasible, value for money ways of targeting funding support to those most in need. We will make further announcements in the spring.”